Correlation Between Jiayin and Tesla

Can any of the company-specific risk be diversified away by investing in both Jiayin and Tesla at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Jiayin and Tesla into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Jiayin Group and Tesla Inc, you can compare the effects of market volatilities on Jiayin and Tesla and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Jiayin with a short position of Tesla. Check out your portfolio center. Please also check ongoing floating volatility patterns of Jiayin and Tesla.

Diversification Opportunities for Jiayin and Tesla

-0.55

Correlation Coefficient

Jiayin  Tesla

Excellent diversification

The 3 months correlation between Jiayin and Tesla is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding Jiayin Group and Tesla Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tesla Inc and Jiayin is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Jiayin Group are associated (or correlated) with Tesla. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tesla Inc has no effect on the direction of Jiayin i.e., Jiayin and Tesla go up and down completely randomly.

Pair Corralation between Jiayin and Tesla

Given the investment horizon of 90 days Jiayin is expected to generate 5.32 times less return on investment than Tesla. But when comparing it to its historical volatility, Jiayin Group is 1.43 times less risky than Tesla. It trades about 0.05 of its potential returns per unit of risk. Tesla Inc is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest  33,480  in Tesla Inc on October 5, 2024 and sell it today you would earn a total of  3,790  from holding Tesla Inc or generate 11.32% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	85.0%
Values	Daily Returns

Jiayin Group  vs.  Tesla Inc

Jiayin Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Jiayin Group has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fragile performance in the last few months, the Stock's forward indicators remain very healthy which may send shares a bit higher in February 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Tesla Inc

Risk-Adjusted Performance

0 of 100

Solid

Over the last 90 days Tesla Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively fragile basic indicators, Tesla unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Jiayin and Tesla

The main advantage of trading using opposite Jiayin and Tesla positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Jiayin position performs unexpectedly, Tesla can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Tesla will offset losses from the drop in Tesla's long position.

The idea behind Jiayin Group and Tesla Inc pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..